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Greece 'falling short on deficit cuts'

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Greece 'falling short on deficit cuts'

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Greece is reportedly falling short in narrowing its budget gap.

A Greek government official has told Reuters this year’s deficit will likely fall to only around nine point three percent of gross domestic product due to weak revenue growth.

The recently released draft budget for 2011 projected this year’s shortfall at 7.8 percent of GDP, down from last years 13.8 percent.

There will also be a knock on effect from the fact that last year’s deficit is likely to be revised higher by the European Union’s statistics agency Eurostat, to top 15 percent.

“We estimate the 2009 budget deficit will reach about 15.5 percent of GDP after Eurostat’s revision, with a possibility of a divergence in the order of 0.1-0.2 percent,” the government official said.

Austerity policies including cuts in public sector pay and pensions and tax hikes to shrink the deficit have taken a toll on the economy, which is seen contracting four percent this year, reducing government revenues.